news

Steeles Law’s Michael Fahy looks at some of the more contentious property aspects surrounding wind farms.

Click here to view the article in full published by Local Government Lawyer.

With injunctions being served by Facebook, and the first “Twibel” case in the UK (libel duty comments made by Twitter) being won, a recent case regarding contracts made by email highlights how the law is attempting to keep pace with our ever changing forms of media.

Golden Ocean case

The case of Golden Ocean came to the Court of Appeal earlier this year. Golden Ocean claimed that a charterer had failed to honour its obligations to take delivery of the vessel under a guarantee worth in excess of $50 million. The defendants claimed there was no contract or guarantee in existence despite oral communication and an extensive chain of emails. Relying on section 4 of the Statute of Frauds 1677 (which requires that certain types of contracts must be recorded in writing with sufficient detail in order to be legally binding), the defendants argued that the guarantee was incomplete as it was contained over a number of emails which could not be patched together sufficiently, the names could not constitute signatures and that the final email referred to a formal contract being produced which never materialised.

The Court of Appeal, however, agreed with the claimants and the High Court, confirming that the string of negotiated emails promptly signed, albeit even if informally, such as by first name, initials or nickname, would constitute an enforceable guarantee. The key was that the parties intended to be bound by the arrangement irrespective of the fact that the formal document which was expected to be drafted was never actually produced.

This judgment is, perhaps, not all that controversial, as it has long been established that contracts can be formed over email and through other means of instantaneous communication. However, what is clear from Golden Ocean is that if parties show intent to be legally bound to one another, they will be. Stating “Subject to Contract” on the top of all communications and draft documentation can be a useful way of clearly indicating that you do not want the content to be legally binding.

Looking ahead

It is increasingly clear that the law needs to adapt to keep up with the ever moving world of media and social networking. It is expected that the Parliamentary Joint Committee on Privacy Injunctions will recommend that social networks, such as Facebook and Twitter, be subject to injunctions and in doing so force sights to remove libelous comments. The same Committee may also request that Google censors search results in order to block such material from being accessed.

The ways in which businesses choose to communicate with each other are changing and as they do we need to look to see how the law applies to new forms of media. What Golden Ocean shows us is that laws that are centuries old can be applied to the media reality of today. Whilst the method may be different, the same rules can still apply – statements made through new media will be taken as seriously as those made by traditional forms.

Some advice

In conclusion here are three top tips to bear in mind when you are negotiating a legal arrangement:

1.Complete a formal agreement: if you do wish to formally document an arrangement then you should take it upon yourself to draft (or indeed have a suitably qualified lawyer draft) the appropriate agreement and not start trading with a counter-party until such agreement is finalised.

2.“Subject to Contract”: clearly write the term “subject to contract” on the top of all communications and draft documentation which you do not wish to be binding.

3.Don’t be fooled by modern media: do not be naive and think that by using email, Twitter, Facebook and various other forms of modern media that you are somehow out of the reach of the law.

A recent Court of Appeal decision highlights the increasingly far reaching liability of employers for the actions of their employees.

Judgment in JGE v The Trustees of the Portsmouth Roman Catholic Diocesan Trust was handed down on 12 July 2012. The question before the court was whether the church should be responsible for paying damages to a child who was abused by the priest at the church in the 70’s. The court said yes, the (now grown up) victim should be compensated by the church.

To many, it would seem intuitive that a victim of child abuse should be able to recover compensation from the wrongdoing organisation. However, the case actually threw up two key issues, namely: can sexual abuse ever fall within the course of the priest’s duties, and should the church be liable for the priest’s actions?

The first question was relatively straightforward to answer, thanks to a recent decision of the higher court. To be clear, an employer is not merely responsible for what its employees do under direct instruction from the employer. An employer is responsible for all actions which the employee takes which have a sufficiently close connection to the employee’s employment.

So in a 2001 case, Lister v Hesley Hall, the House of Lords confirmed that if an employee was entrusted to look after children, the employer would be liable for sexual abuse by the employee when he was supposed to be looking after them, and the victims could obtain damages from the employer. This was despite sexual abuse clearly being outside of the employee’s duties; his actions were sufficiently closely connected to his employment to pin liability on his employer.

So, in JGE v The Trustees of the Portsmouth Roman Catholic Diocesan Trust, a victim of sexual abuse at the hands of the priest at the church was, in principle, able to claim damages against the bishop to whom the priest answered.

However, the church employed a further argument to avoid liability. The court took expert advice from Roman Catholic academics and found that the priest was not actually an employee (their relationship was intended to be determined by canon law, not civil law, so no employment relationship arose). The court therefore had to decide whether they could extend liability to a situation which was “akin to employment”.

In JGE, the Court of Appeal explicitly said “I confess I have found this difficult to decide”. Although the legal framework is a very real constraint on the court, the judges must have felt huge reluctance to find that a victim of child abuse should not be able to recover damages, particularly when even the barrister for the church described the priest’s actions as “abhorrent”, and rightly too.

The court therefore confirmed that liability in relationships “akin to employment” can be found under specific circumstances, and indeed found such liability in this situation. So, even though the priest was specifically held to not be an employee, the church could still be liable for his actions because he was in a position which was “akin to employment”; the key question being one of control.

This decision does, of course, have huge implications for a modern economy. A business (or, indeed, charitable organisation) can no longer absolve itself of the wrongdoings of another simply because that other is not an employee. A business must ensure that all individuals over whom they exercise sufficient control take proper care in the exercise of their duties (and should probably obtain appropriate insurance), even if the business does not employ them.

Conversely, an injured victim may now be able to obtain compensation from the organisation which had actual control of a situation, and the organisation which might more properly be expected to be insured.

The church has been refused permission to appeal to the Supreme Court, but specifically because that court is due to give judgment in a similar case, Various Claimants v The Catholic Child Welfare Society and the Institute of Brothers of the Christian Schools & ors, very soon (the hearing was on 23 July 2012). That case may provide further clarity.

It may surprise some readers to learn that the above cases have almost no bearing whatsoever on employment law and the rights and obligations as between employers and employees. This fact serves only to show how complex the law of both employment and personal injury is, and proper advice should be sought if in any doubt whatsoever.

Employers using zero hours contracts should be aware of a recent decision of the Employment Appeal Tribunal (EAT), in which it was held that individuals engaged under such a contract had continuity of employment. Professional support lawyer Elizabeth Stevens reports.

This case concerned a group of care workers, employed to provide 24 hour care to a severely disabled woman. The contract for the provision of the care service between their employer, Carewatch Care Services Ltd (Carewatch), and the local primary care trust was terminated and a new contract was entered into with Pulse Healthcare Limited (Pulse). The individuals who were engaged to provide the care claimed that their employment transferred to Pulse under the provisions of TUPE.

Pulse denied that the claimants were employees on the basis that they were engaged under a contract headed “Zero Hours Contract Agreement”, which included a provision stating that they were free to work for other employers. Pulse therefore claimed that the ‘mutuality of obligation’ necessary for an employment relationship did not exist. If the claimants were not employees, they would not be covered by the provisions of TUPE.

The employment tribunal disagreed that this reflected the reality of the situation, highlighting the fact that the claimants had worked fixed hours on a regular basis over a number of years. The contract made repeated references to “employment”, and included many of the usual provisions of an employment contract including annual leave, sickness, termination and pension. The individuals were provided with a uniform and were paid on a PAYE basis. The employment tribunal therefore concluded that the individuals were employees, with continuity of employment. Pulse appealed the tribunal’s decision.

The EAT has upheld the tribunal’s decision on the employment status of the claimants. The judge highlighted the evidence demonstrating the critical nature of the care package provided by the claimants and the importance of maintaining an established team of carers for the client. In the judge’s view, it was fanciful to suppose that Carewatch relied on ad hoc arrangements in the provision of such a package. The EAT considered that the tribunal had been justified in its conclusion that the “Zero Hours Contract Agreement” did not reflect the true agreement between the parties.

Comment

This decision reflects the willingness of the courts and tribunals, particularly since the decision of the Supreme Court in Autoclenz v Belcher (see our report), to look beyond the terms of the written agreement to assess the true nature of the relationship between the parties.

It seems clear from the evidence in this case that the contract was not drafted in terms properly consistent with a genuine zero-hours arrangement, and that the reality of the arrangement was consistent with an employment relationship.

The case will now return to the employment tribunal to determine whether the claimants’ employment transferred to Pulse under TUPE.

In practice, the majority of zero-hours contracts will establish an employment relationship. With careful drafting, and depending on the frequency an individual is engaged under such a contract, it might be possible to prevent continuity of employment arising in between each assignment under the contract. However, employers should be very cautious in relying on such contracts if they do not reflect the reality of the arrangement between the parties.

A copy of the EAT judgment is available here

Emma Alfieri reports on the Government’s plans for a reshaped child maintenance system.

The Government has unveiled detailed plans for a reshaped child maintenance system in Great Britain.

Ministers believe the current system, which costs £0.5bn a year, and focuses purely on collecting and transferring money has proved inefficient and has damaged separated families.

The Government wants to reshape the system so it is focused on supporting families to make their own arrangements which are in the best interests of the children involved.

In order to achieve this, it is proposed that £20m is invested to provide a network of support services to help separated families. The policy document; Supporting Separated Families; Securing Children’s Futures sets out the key improvements.

For the first time, all parents considering applying for child maintenance payments via the state will be invited to discuss their situation and consider possible alternatives. Where appropriate, it will signpost them to community-based support services.

The new statutory maintenance scheme, to be known as the Child Maintenance Service, will take cases where parents cannot make their own arrangements. It is proposed, as well as a £20 application fee, the parent paying maintenance will pay an additional collection fee of 20% on top of each assessed payment.

The parent receiving maintenance will have 7% deducted from each assessed payment. But parents who fail to pay will face additional penalty charges reflecting the cost of enforcement action. For example, it is proposed that a Liability Order from the courts will carry a £300 surcharge, while £200 will be charged if money has to be removed from their bank account via a lump sum Deduction Order.

Both parents will avoid collection fees if the paying parent opts to pay the other directly without use of the collection service. This is designed to build trust between separated couples.

The new Child Maintenance Service will continue to be heavily subsidised but will be faster and fairer and better for parents.

Payments will usually be based on the paying parent’s latest tax-year gross income, reported by HM Revenue & Customs. Use of tax data means assessments will depend less on what parents choose to disclose about their income. Maintenance calculations will be reviewed annually to ensure they remain fair accurate and up to date.

Emma Alfieri, from our family team comments: “This in encouraging news. The additional support for parents to work together can only be useful and the new system should encourage reluctant parents to take their responsibilities seriously”.

For further information please contact Steeles Law’s family team.

Ian Robotham, Associate in the Dispute Resolution team at Steeles Law, reports on recent developments on the “Interest Rate Swap Scandal” that has become big news over recent months and gives his opinion on matters.

Update

Since first reported by Nigel Lubbock, Head of the Company and Commercial team at Steeles Law in 2010 (click here for link to that article), complaints and allegations against the country’s major financial institutions that they mis-sold derivative (hedge) products to SME’s have gathered pace.

Recently, one particular broadsheet newspaper has given significant media coverage to the issue and a self-help action group of affected SME’s has been set up to champion the cause for its members. In addition, MP’s have debated the issue in the House of Commons and litigation continues in the UK Courts.

All of the above culminated in a two month review of the issue by the regulator, the Financial Services Authority (FSA), the results of which were issued in a report published on its website on 29 June 2012.

Outcome of the Review

In its review, the FSA found serious failings in the sale of interest rate hedging products by the major financial institutions.

In particular, the FSA found concerns regarding (a) inappropriate sales of more complex varieties of interest rate products, in particular Structured Collar products (click here for a link to a previous article by Steeles Law in which we explained the broad categories of products in more detail), and (b) poor sales practices in the selling of other interest rate hedging products.

The FSA further found that, where sold to ‘non-sophisticated’ customers (see further below for a definition in this regard) who may lack expertise and understanding of the product, the sale of some interest rate hedging products may be inappropriate.

To attempt to resolve the above concerns, the FSA has agreed with the four largest UK retail banks (those being Barclays, HSBC, Lloyds and RBS) that they will:-

(i) provide fair and reasonable redress to non-sophisticated customers who were sold Structured Collars on or after 1 December 2001;

(ii) review sales to non-sophisticated customers of other interest rate hedging products (except Caps or Structured Collars) sold on or after 1 December 2001; and

(iii) review the sale of Caps if a complaint is made by a non-sophisticated customer.

These steps are to be carried out under the scrutiny of an independent reviewer overseen by the FSA.

The following link will take you to the FSA’s full review:-

https://www.fsa.gov.uk/static/pubs/other/interest-rate-hedging-products.pdf

In addition, on 23 July 2012, the FSA announced that 7 other UK banks (Allied Irish (UK), Bank of Ireland, Clydesdale and Yorkshire banks, Co-operative Bank, Northern Bank and Santander UK) have also agreed to the same resolution as the four major UK banks.

In its review, the FSA envisages a process whereby the banks; appoint an independent reviewer, contact customers it deems those customers fall within the scope of the agreement with the FSA (i.e. non-sophisticated customers), provide redress where appropriate and review the sales of other interest rate products (again providing redress where appropriate).

Comments

In our opinion, the review is to be welcomed. The FSA has identified that there clearly is an issue here and has at least taken some steps to remedy. We hope that the review will result in the appropriate financial recompense that all victims of mis-selling are entitled to.

However, the review, in our opinion lacks bite and leaves a significant number of loose ends.

Non-sophisticated customers

To define “non-sophisticated customers”, the FSA has followed the criteria used in the Companies Act 2006 for classifying companies that are subject to the small companies regime. Therefore, a customer would be deemed non-sophisticated if it did not meet two of the following three criteria at the time the product was sold:-

1. A turnover of more that £6.5m 2. A balance sheet total of £3.26m 3. More than 50 employees.

In addition, the FSA has allowed the bank to categorise a customer as “sophisticated” even if it does not fall within the above definition if the bank can demonstrate that at the time of sale the customer had the necessary experience and knowledge to understand the product.

However, what if the customer does not agree with the bank’s allocation to a category? For example, what if the bank categorises a customer as sophisticated (so as to fall outside of the review) but the customer feels he should be deemed non-sophisticated? The bank’s assessment will be scrutinised by the independent reviewer. However, where there remains a dispute, the FSA envisages the customer will have to complain to the bank in person and, if that does not satisfactorily resolve the issue, make a further complaint to the Financial Ombudsman Service (FOS). To be eligible to use this service you must have a turnover of less than €2m and fewer than 10 employees. All of which will take time (time a customer may not have, for reasons given below).

Sophisticated customers

If you are a sophisticated customer (on the definition above), you fall outside of the review. This is even the case if the bank previously classified you as a retail or private customer for regulatory purposes.

If you have been mis-sold a financial product, you will have to pursue the bank’s internal complaints procedure and, if not resolved satisfactorily, complain to the FOS, if you are eligible to do so. If you are not eligible to do so, you will have to take formal legal action through the Courts, all of which will take time.

Redress

The redress is to be calculated on the basis of what is fair and reasonable. However, the basis of the calculation of what is fair and reasonable has not been addressed. What happens if (we would say when) what a customer considers to be fair and reasonable (a full refund plus any consequential losses) is considerably different than what a bank considers to be fair and reasonable (for example redress based on an alternative fixed rate product)?

If the parties cannot agree on the level of redress, the customer either has to refer his complaint to the FSO or, if not eligible, will have to take formal legal action.

Insolvency of Customers

What if the customer has become insolvent since the product was taken out?

If a limited company has been dissolved, there is no legal entity to which any redress can be paid. Interested parties will need to take legal advice about whether they can have the limited company restored to the Companies House Register.

Timescales

Perhaps the biggest “loose end” of all is that the FSA has given no time limit within which the banks are required to fulfil their obligations under the agreement.

Whilst the banks are obliged to look at all hedge agreements sold on or after 1 December 2001, customers with a complaint will have to be mindful of limitation issues in the event that they do not reach a settlement with the banks.

It is important to bear in mind that the majority of these sales took place between 2006 and 2008. The Limitation Act 1980 provides that all contract/negligence claims must be commenced not more than 6 years from the date the action arose. In most cases, date the action arose is likely to be the inception date of the product (but there may other factors which could bring this date forward).

Those customers with complaints must be aware that, should there be any disagreement in relation to any/all of the factors referred to above, they will not be able to obtain legal assistance from the Courts once 6 years have elapsed from the date the action arose. This is so even if those loose ends referred to above have not been resolved and would leave complainants at the mercy of the banks (and the independent reviewer) if claims are not issued at Court by the relevant limitation date.

Conclusion

There are still significant potential problems for customers with complaints of mis-selling against banks. There is continued uncertainty and potential for disagreement in relation to a number of areas that may require court action to resolve. Crucially, the inability to successfully pursue a claim through Court after limitation expires means customers with complaints should not delay in contacting us to obtain urgent legal advice. We are able to quickly clarify clients’ positions and commence legal action to protect them should it be necessary.

At Steeles Law, we have acted, and continue to act, on behalf of a number of customers with complaints against banks and have significant experience with these disputes. We continue to act for those clients that have issued claims at Court and provide swift, assured and commercial legal advice to SME’s (and individuals). Do not hesitate to call us should you require legal assistance in this regard.

Ian Robotham

If you do require assistance please click here for Ian Robotham’s contact details and here for Nigel Lubbock’s contact details.

Vicki Mitman, a solicitor in the firm’s Franchising team, recently attended the bfa roundtable discussions in Warwick. The roundtable discussions included:

• Franchisee profiling
• Local marketing
• Monitoring franchisee performance
• Ongoing training and support
• Recruiting the right franchisees
• Development of online tools

Each roundtable discussion was chaired by a member of the bfa who introduced the topic and discussed their personal experiences. Members of each group were encouraged to share their knowledge and experiences of a particular issue and could ask questions to gain insight and different approaches from other bfa members and affiliates. The topics discussed created lots of interest and produced lively discussions. The break-out groups included both young and mature franchisors and affiliated consultants, accountants, bankers and lawyers.

Leathes Prior is an affiliate member of the bfa and has specialised in franchising for over 30 years.

Norwich International and NCP have worked closely together to implement changes within the short stay car park, to make life easier and maintain safety of customers, staff and visitors.

A new specific ‘drop off’ area has been created within the short stay car park for customers – both passengers and those bringing people and picking them up from the airport, to deter drivers from stopping in unauthorised areas and to also help ease congestion at busy times within the car park. The first 10 minutes are free of charge, with standard rates applying thereafter.

The new area is clearly signed; anyone coming to the airport should look carefully for the signs indicating where they should go, to either the drop off area, short stay or long stay car parking.

Mark Kraft, business manager at NCP commented: “NCP is always looking at ways to improve our customer experience when using our car parks, and it became very clear from customer feedback that a drop off lane for passengers arriving at the airport would be really helpful. This way we reduce congestion points for everyone, and make the process as seamless as possible.”

Steeles Law Head of Real Estate Michael Fahy and Trainee Solicitor Laura Tanguay consider the Court of Appeal decision of Ener-G Holdings plc v Hormell [2012] EWCA Civ 1059 (31 July 2012) on personal service and ‘permissive’ drafting.

In this case, the Court of Appeal considered an appeal by Ener-G Holdings Plc (“Ener-G”) of the decision of the court of first instance which found that Ener-G’s £2 million claim for breach of warranty was time barred.

Key clauses

The two key clauses in the agreement between the two parties stated:

1. Ener-G must give written notice of any breach of warranty claim to Mr Hormell (the Respondent) by ‘the second anniversary of completion’ (i.e. by 2 April 2010);

2. Proceedings in respect of that claim must be issued and served not later than twelve months after the date of that notice; and

3. Any such notice ‘may be served by delivering it personally or by sending it by pre-paid recorded delivery’.

The facts

Ener-G served its notice for breach of warranty on Mr Hormell in two different ways. First, a process server attended Mr Hormell’s home address on 30 March 2010 to personally serve the notice. Because no one was home at the time, the process server left the envelope in the front porch on a table. Later that afternoon, Mr Hormell found the envelope, opened it, and read the notice. Later that day, a second notice was sent to Mr Hormell by recorded delivery which was deemed received on 1 April 2010.

Ener-G commenced court proceedings in respect of the claim on 29 March 2011. The claim was served by means of personal service and was deemed served on 31 March 2011. Therefore, if the notice delivered by the process server on 30 March 2010 was found to be properly served, Ener-G’s claim was time barred as it would not have been served on Mr Hormell within 12 months of the notice. If, on the other hand, the notice delivered by the process service was found not to be properly served, then the clock for serving the claim would not have started running until 1 April 2010 – meaning that Ener-G’s claim was not time barred.

‘Delivering it personally’

Ener-G argued that ‘delivering it personally’ required that the notice be handed personally to the intended recipient. As this did not happen, the notice delivered by the process server and left on the table was invalid. Mr Hormell contended that it was enough for the notice to have been left at the property (albeit not handed to him in person) and so the notice should be upheld as valid. The Court of Appeal upheld the decision of the court of first instance and ruled that ‘delivering it personally’ required the notice to be handed to Mr Hormell personally, and the actions of the process server did not satisfy this requirement.

Permissive rather than exclusive

However, the wording of the clause in this agreement stated that the parties ‘may’ serve the notice by delivering it personally or by sending it by pre-paid recorded delivery. This wording was permissive rather than exclusive, referring to “may” rather than “must” or “shall”, and therefore Ener-G were free to use any method of service and were not limited to the two methods specified. Accordingly, the actions of the process server did in fact constitute good service for the purposes of the agreement and consequently Ener-G’s claim was time barred. The decision of the Court was split 2:1, with Lord Justice Longmore’s dissenting view “that it is counter-intuitive to conclude, when the parties have taken the trouble to spell out [how a notice can be served] that a notice can be served … in any other way the deliverer of the notices chooses.”

Practical guidance

1. Do not leave the service of important documents to the last minute where time is of the essence. Lord Justice Gross commented by saying, “I fear that by leaving service until so late in the day, the Appellant has been the author of its own misfortune.”

2. Be aware that ‘personal service/delivery’ means service to the addressee in person and not just delivery to the addressee’s premises.

3. Avoid using permissive words such as ‘may’ in an agreement if what is really intended is that the parties shall or must do something.

If you require advice on any issues raised in this article please contact Michael Fahy on 020 7421 1720 or mfahy@steeleslaw.co.uk.

Steeles Law Head of Planning & Environment David Merson looks at the Coalition’s proposals to revise the planning obligations regime to try and help kick-start stalled development proposals.

It is suggested that some two thirds of approved building projects in the last five years have either been dumped or stalled as a result of planning obligation costs making development proposals uneconomic in the wake of the credit crunch and subsequent recession.

The Secretary of State for Communities and Local Government, Eric Pickles, is therefore sending ‘troubleshooters’ into 13 local planning authorities to see if re-opening and re-negotiating section 106 planning obligation deals could provide a means of getting some projects back on track.

Coupled with this, the Coalition has announced a consultation exercise involving amendments to the Town and Country Planning (Modification and Discharge of Planning Obligations) Regulations 1992 SI 1992/2832.

The proposal will allow planning obligations entered into prior to 6th April 2010 to be re-negotiated in order to unlock development projects which were negotiated in more buoyant economic conditions but which are currently not economically viable.

Section 106 of the Town Country Planning Act 1990 (as amended) allows local planning authorities, usually before granting planning permission, to enter into planning obligations with developers. Those obligations can be voluntarily renegotiated at any time but, under the terms of the Regulations and absent any agreement, can be subject to a formal application process to reconsider the terms when it is five years old. Appeal provisions apply where such an application has been refused.

It is anticipated that the new regime will operate to allow planning obligations entered into on or before the relevant date to be re-negotiated. This provision removes the five-year restriction in the current Regulations from those planning obligations but those more recent planning obligations entered into after that date will not be able to benefit from this change. They must either be re-negotiated by agreement or wait until the expiration of the five-year period and then go through the existing formal modification and discharge procedure.

Developers looking to rely on the revised provisions, if and when enacted, will still need to ensure that the substantive legal test is met and there will, according to the consultation document, need to be strong justification for any change(s) sought. The modified obligation must still be acceptable in that it must still be necessary to make the development acceptable in planning terms.

Note however that local planning authorities cannot be forced to re-negotiate planning obligations. They would be expected to act reasonably and to consider and determine such an application applying proper planning considerations. But they might refuse to do so or they might conclude that there was still clear justification for the obligation to remain unmodified. This would engage the appeal provisions and could also, where the relevant grounds arose, permit an application for judicial review.

Details of the consultation exercise can be found here. The consultation period runs until 8th October 2012.

If you require further information or advice on any issues raised in this article or any other planning & environmental matter please contact David Merson on 020 7421 1720 or dmerson@steeleslaw.co.uk

Steeles Law is pleased to announce that the firm is exhibiting at the popular Diss on View business event, presented by Diss Business Forum (DBF) and Hales Group Ltd once again this year.

Steeles Law is pleased to announce that the firm is exhibiting at the popular Diss on View business event, presented by Diss Business Forum (DBF) and Hales Group Ltd once again this year.

We would like to invite all clients and contacts in the Diss area to come and visit us at stand number 7 at the exhibition, which will take place on Friday 14 September, 1.30 – 5.00pm at the Park Hotel, Diss.

Visitors can also book in to attend a networking brunch from 11.30am – 1.30pm before Richard Bacon, MP for South Norfolk and Graham Minshull, Diss Town Mayor open the event at 1.30pm. At the end of the day, there’s another opportunity to combine business with pleasure at a Cocktail Workshop from 5.30pm.

Details of the day and booking forms for both networking events can be found on the DBF website www.dbf.org.uk.

We look forward to seeing you there.

Steeles Law Head of Real Estate Michael Fahy and Trainee Solicitor Laura Tanguay consider the High Court decision of E.ON UK plc v Gilesports Ltd [2012] EWHC 2172 (Ch) on landlord’s consent for assignment.

Introduction

This case is a useful illustration of how not to assign a lease. We outline the facts of this case and review what can happen when a tenant assigns its sublease to another party without first obtaining the immediate landlord’s proper consent.

Consent to Assign

It is typical for a lease to provide (as this sublease did) that an assignment may only be completed with the landlord’s prior written consent, such consent usually taking the form of a Licence to Assign. A tenant must therefore make an application to its landlord for it to consider. Under section 1(3) of the Landlord and Tenant Act 1988, landlords must consider and respond to a tenant’s request within a reasonable time frame, and, if consent is refused, provide the tenant with the reasons for such refusal in writing.

The Facts

In this case, an application for the landlord’s consent had been sent via email, which was not in accordance with the terms of the sublease which incorporated section 196 of the Law of Property Act 1925 (as amended by the Recorded Delivery Service Act 1962) for the service of notices (i.e. that notices must be left at the landlord’s last known place of business or sent by Recorded Delivery). The landlord did not respond to the request and so no consent was received by the tenant. Despite this, 11 days after submitting its request, the tenant completed the assignment of the sublease. As consent had not been given, the landlord sought to recover rent from the tenant post assignment. In court, the tenant argued that the landlord had unreasonably delayed in giving consent and it should therefore be deemed to have consented.

Judgment

It was held that service of the tenant’s request by email was not sufficient to trigger the landlord’s statutory duty to consider the application under section 1(3) LTA 1988. The application should have been served in accordance with the provisions of the sublease. Even if service by email had been sufficient, the court stated that 11 days was too short a period to hold that the landlord had been unreasonably in its delay. Unfortunately for the tenant, the bad news did not end there; as the assignment was never registered with the Land Registry (in breach of covenant) and so by virtue of section 7 LRA 2002, the assignment of the sublease became void and reverted back to the tenant. As such, the tenant was still the current tenant (and not the ‘former tenant’) for the purposes of the section 17 notice for rent demanded under LTCA 1995, and therefore, its liability for rent arrears was not limited by this section.

If you require advice on any issues raised in this article please contact Michael Fahy on 020 7421 1720 or mfahy@steeleslaw.co.uk.